LIC & LIT Listed Investment Companies (LICs) 2020

In regards to VGS to LIC I’ve come to the conclusion personally to hold both.

I feel LICS are held by stronger hands and will perform better in down turns then VAS which is highly more liquid and traded where LICs are accumulated for the long with lower emphasis on selling. I feel LICs will hold their value better in shocks to the market and down turns

absolutely no data on this, just my opinion

 

Older LICs were the only low fee listed funds available until relatively recent times. That’s the only choice I had back then. Then along come Index ETFs which also offer very low fees and wide diversification. Each has it’s pros and cons.

I think there is a place for both in the portfolio but indexing is simpler given the absence of NTA issues. So based on simplicity, guaranteed market performance and no unexpected surprises from NTA variations indexing would likely be the preferred choice for the core of the portfolio even more so for Global exposure as LICs in this space have high fees and overall have a poor track record.

Then again LICs are likely to have less unexpected surprises with dividends. For some that offers great comfort. And for those prepared to make an effort to understand the nature of LICs there can be attractive opportunities at times. However this might be more complexity than some desire.

In my case I’d feel uncomfortable with indexing only just as I would with LICs only. The two combined works well for me given some occasional nagging what-ifs associated with owning just one or the other.

 

Great Response @Nodrog

For me, I recall a Google Talk (I think?) with JL Collins and he stated even though all his portfolio was indexed he had a couple of direct holdings when asked about it he said it's like a disease or compulsion that he couldn't resist but would not encourage others to do it.

I am the same I have a few direct holdings but I realise them for what they are and what my impulse is so I ensure I keep the portfolio allocation very small to ensure - A don't blow myself and B probably just as importantly I don't think I am some gun stock picker rather than just being lucky when one direct holding does well which is probably closer to the truth.

 

Any dilemma I had was resolved a few months ago when I sold all the direct shares I then held.

LICs for decision making and active management on my behalf, ETFs for entities which don't care about future prospects of individual shares. Other investors are doing the salivation exercise and, while I could/will be impacted at some stage, I will take it as a given the companies will still provide me with dividends.

That's it in a few words.

 

Different drivers same destination

 

I was referring more to investing excess cash (eg from dividends or wherever its source) straight away removing the temptation to time / procrastinate etc which waste mental energy / create stress.

 

What is this? Please explain.

 

Ok Pauline. I assume you might be joking but just in case the smoke has gotten to you cash greater than what’s needed to cover living expenses for desired time period.

 

Yes and quite an important point being made. A lot of energy gets wasted debating which product is best when in fact that’s far less important than other things.

 

I see. It's been so long I'd forgotten. Ta for the clarification.

Some do go through stages in a way and want things to be simple without the overhang of worrying what to do with spare funds.

I consider I may have arrived at that point. Late in the game but at least I have got to that point.

 

I too was confused; thought @Nodrog meant excise cash. The hidden key that ties home brew to increased savings rates available for investment into LIC’s and hence home brew an on-topic subject for the LIC thread.

 

We’ve been decluttering the house and I’m working on decluttering my head also. The destination you describe is where I want to be going forward. I just wish it didn’t always take me so long to get to the damn destination.

 

I was trying to keep this being one of the greatest tax minimisation strategies secret. Now everyone knows. If it gets too popular the Guvment will close the loophole.

PS: At least good to see the thread back to normal eg grog, coffee and the occasional post on LICs. I must be off colour today given the number of LIC posts.

 

Besides speaking of excess cash you should be ashamed of yourself with it currently nearly double your SAA (ie 2% vs 1%). Not good enough. A week at Boglehead rehab clinic is strongly recommended.

 

Having a coffee now actually. Due to nerves I guess.

One of my kids is in an occupation considered very essential currently but I heard they are recalling most of them in preparation for any potential problems tomorrow in this region.

Hmm, the beast has decided to roar. Batlow is considered indefensible. Nasty times.

I'll be quiet for a while.

 

Take care mate, stay safe.
want to hear from you when the smoke clears, literally.

 

Heathen

 

Yes, I’m still suffering from PTSD. Once seen it can never be forgotten.

 

Sensible lass. Only a crazy would drink wine at room temperature when that temperature is 40C+

Always a difference between cellar temperature and room temperature.

Thanks. More concerned for my brood than myself.

 

Room temperature was 21C. So yes a few degrees above the ideal for Shiraz from what I understand? In fact them being from the Gold Coast put jackets on when it got below 20C inside. Anyhow seeing ice go into a near $200 bottle of wine was a traumatic experience. Might have to dig out the anti depressant meds to help deal with it.